Offshore Jurisdictions

Belize, formerly British Honduras, became a British Colony in 1862 and gained independence in 1981. Belize is an exporter of agricultural produce and tourism is a major industry. The finance sector is expanding.

Belize is a parliamentary democracy where the major commercial centre is Belize City. The administrative capital is Belmopan. Executive Authority is exercised by the Prime Minister and Cabinet.

The International Business Company Act of 1990 enabled the formation of the offshore business company, which is used by non-residents for their international trading and investment purposes. It must generally conduct its activities outside of Belize although a limited number of onshore activities are permitted. Other forms of company are the Limited Life Company, introduced by the Limited Life Companies Act 1999 and the protected cell company. Belize has several double tax treaties including UK, Sweden, Denmark as well as several countries of the Caribbean Community. Belizean IBC’s are specifically exempted from any form of income tax, capital gains tax or transaction tax. They can conduct business in any foreign currency free from Belizean government regulation or restriction. Whilst Belize is on the OECD grey list as a tax haven they have made substantial progress which has been noted by the OECD and are nearing being moved off this to the white list. Belize has a modern computerized registry and is capable of incorporating a company within one hour.

The British Virgin Islands is internally self- governing with a ministerial system of government. The Governor is appointed by the British Crown and retains responsibility for defence and internal security, external affairs, the civil service and the administration of the Courts and finance.

The British Virgin Islands financial services industry introduced legislation in 1985 to permit the formation of International Business Companies(I.B.C.). The company law was modern and flexible and the islands flourished. There are now probably more offshore companies incorporated in the British Virgin Islands than anywhere else. In 2005 the I.B.C. Act was replaced by the Business Companies Act 2004, which brought the company law up to date. At the same time the British Virgin Islands introduced a zero rate system of corporate taxation to comply with the international obligation to treat resident and non-resident taxpayers equally. Companies incorporated under the Business Companies Act 2005 are not allowed to trade with the British Virgin Islands or own property there. As a British controlled territory, the British Virgin Islands are covered by the European Savings Tax Directive.

The Cayman Islands is a group of three islands in the Caribbean to the south of Cuba. The capital and financial centre, George Town is on the largest island, Grand Cayman. The territory is a British Crown Colony and the British government has the ultimate power to legislate. There is however a Legislative Assembly which governs and enacts legislation with the consent of the British Crown. The Governor is responsible for external affairs, , law and order and the civil service. The language is English and the currency the Cayman Islands dollar. Financial services and tourism are the mainstays of the economy.

The Cayman Islands hosts a substantial financial services industry and is a major centre for offshore banking, offshore fund management and captive insurance operations. The Companies’ Act 1960 as amended is based on the English Companies’ Act of 1948. The Act provides for exempt companies and a Cayman exempt company must conduct its business activities outside the Cayman Islands. It is not permitted to own real estate within the Cayman Islands.

Being a British Controlled Territory the Cayman Islands is subject to the terms of the European Savings Tax Directive.

Gibraltar is a British Overseas Territory and is part of the EU, although it is outside the EU Customs area with no obligation to harmonise V.A.T.  It is also exempt from the Common Customs Tariff and the Common Agricultural Policy, but is subject to the EU Savings Tax Directive.

Companies are incorporated in Gibraltar under the Companies' Act 1929 which is based on U.K. company law. There is no special regime for offshore companies and the company used by non-residents for international activities is the non-resident company. A non-resident company cannot be owned or managed and controlled by persons resident in Gibraltar, it cannot trade or carry on business in Gibraltar with Gibraltar residents or remit income to Gibraltar and it must have a Gibraltar resident secretary and keep its Company register there.  Providing theses conditions are met a Gibraltar non-resident company is not taxable in Gibraltar.  

Guernsey is the second largest of the Channel Islands and is a dependency of the British Crown. The capital and financial centre is St. Peter Port. Guernsey is associated with the European Union by virtue of the treaty of accession entered into by the United Kingdom.

The Guernsey Financial Services Commission is the statutory body, which regulates the financial services industry. In addition to the regulation of banking, insurance and fund management companies, there is a licensing system for businesses providing company formation and management services and trustee services. Guernsey is a major centre for captive insurance and offshore fund management activities.

In order to meet its international obligation to operate a tax regime, which treats both onshore and offshore companies in the same manner, Guernsey is in course of changing its tax regulations. The result will be the abolition of the Guernsey exempt company and it is planned to introduce a zero rate of tax for all companies, both offshore and onshore.

Hong Kong is a Special Administrative Region within the Peoples Republic of China consisting of part of the mainland and numerous offshore islands. Until 1997 it was a British colony. It elects its own legislature and maintains its own Court structure.

Hong Kong is a free port with excellent communications facilities and a major new international airport. China itself is developing rapidly and Hong Kong is its leading gateway. It has its own, fully convertible, currency, pegged to the U.S. dollar and it is the leading financial centre in South East Asia. The official languages are English and Cantonese.

Taxation in Hong Kong

Hong Kong is one of the very few territories that tax on a territorial basis. Hong Kong profits tax is only charged on the profits of a trade, profession or business carried on in Hong Kong. Income arising in Hong Kong is taxed at 17.5% and there are no taxes on capital gains, interest or dividends.

Royalties paid to non-residents are taxed at 5.25% or 17.5% depending on the relationship of the recipient to the payer.

The Island is a dependency of the British Crown and recognises the monarch as Head of State, it is not however part of the United Kingdom and has its own parliament.

For companies, the Isle of Man operates a zero rate tax regime. There are provisions for preventing the avoidance of tax by residents through holding assets within companies they own. Certain finance sector companies operating on the Island pay tax at a rate of 10%. There is a double taxation treaty with the United Kingdom. The European Savings Tax Directive applies in the Isle of Man and individuals resident in a country covered by the Directive and receiving savings interest from an Isle of Man source have the option of paying a withholding tax, failing which the income is reported to the tax authorities in their home country.
 

The finance sector in the Isle of Man is governed by the Financial Supervision Commission, an independent statutory body established in 1983 and responsible for the licensing and supervision of banks, building societies, investment business, collective investment schemes and companies which provide company and trust administration services. It is also responsible for the Companies Registry. 

Companies can be formed in the Isle of Man in one of two ways. The Companies' Act 1993-2004 and the Companies' Act 2006.  The information below refers to the old law.

Jersey is the largest of the Channel Islands and is a dependency of the British Crown.

Jersey is known as a Bailiwick. The Bailiff is appointed by the Crown and presides over the legislative body, known as the States. The Island is associated with the European Union by virtue of the treaty of accession entered into by the United Kingdom. The main industries are financial services, agriculture and tourism.
 

In order to meet its international obligation to operate a tax regime, which treats both onshore and offshore companies in the same manner, Jersey is in course of changing its tax regulations. The Jersey exempt company will be phased out between 2008 and 2011. From 2008 all new companies whether owned by residents or non-residents will be taxed at a zero rate.

The Jersey Financial Services Commission is the statutory body, established in 1998, which regulates the financial services industry. In addition to the regulation of banking, insurance and fund management companies, there is a licensing system for businesses providing company formation and management services and trustee services.  It is a tightly regulated and well respected regime which now allows control and management from Jersey (This does not apply to Exempt companies).

The islands of Nevis, St. Kitts and Anguilla were settled by the British is 1623. The main industries are agriculture, tourism and financial services. The language is English and the currency the Eastern Caribbean dollar. United States currency circulates freely. The State of St. Kitts and Nevis is a parliamentary democracy. The Head of State is the British monarch who is represented on the Islands by the Governor General. The National Assembly is directly elected and the Prime Minister is the leader of the party that wins the election.
 

The financial services industry is concentrated on the island of Nevis and came into being with the passing of the Nevis Business Company Ordinance 1984. This was followed by the Nevis Limited Liability Ordinance 1995 and further legislation covering banking, insurance and fund management. In 1999 further legislation required any business wishing to engage in the formation and management of companies and trusts must be licensed to do so. The finance sector is supervised by a Government Department, the Regulation and Supervision Department.

The form of corporate vehicle used by non-residents is the Nevis Offshore Exempt Company. The company has all the powers of a natural person but is not permitted to trade in Nevis or to own real estate there. The Nevis Offshore Company must have a Registered Agent in Nevis but, except for this, the directors and officers can reside and run the company from anywhere in the world. There is no disclosure of beneficial interest.

The Republic of Panama is in Central America between Costa Rica and Colombia. The capital and financial centre is Panama City. The language is Spanish but English is widely spoken in urban areas and is used in commerce and international trade.

The Colon Free Zone is the world's second largest Free Zone at the Atlantic entrance to the Panama Canal and is dedicated to the re export of goods to Latin America and the Caribbean. A major industry is the operation of the shipping register. Panama is a major flag of convenience. The other major industries are the operation of the Canal, banking, agriculture and tourism. Panama is a constitutional democracy. The National Assembly is elected for a five-year term and the President is both Head of Government and Head of State.

The company most commonly used for international trade and investment is the non-resident Panama Company, Limited Liability Companies are also available. Three directors are required for a Panama company. They may reside and run the company from anywhere in the world and corporate directors are permitted. 

The Government has made strenuous efforts to raise the standards of regulation of the financial services industries to internationally expected levels but there are still concerns in connection with money laundering and corruption.

The Republic of Seychelles was originally a French colony; it was acquired by the British and became independent in 1976. The capital and financial centre is Victoria. In 1994 the Seychelles introduced legislation, which enabled the formation of international business companies and international trusts and covering the licensing of International Trade Zone companies.

The Seychelles International Business Authority regulates the financial services sector, which licenses businesses, which engage in offshore banking, offshore mutual fund and offshore insurance activities and the formation of offshore companies and trusts.

International Business Companies pay a fixed annual license fee, according to the size of the authorised capital. A special license company, i.e. a company operating in the International Free Trade Zone pays at 1.5% on its worldwide income.

Singapore was a British colony from 1819 and joined the Malaysian Federation in 1963. It left again two years later and has since become one of the world's most prosperous countries with strong international trading links. It has an excellent infrastructure, highly educated labour force, political stability and an efficient business structure. English is the most commonly used of the official languages.

Singapore is governed by a cabinet consisting of ministers and headed by a Prime Minister. The legislature is the parliament, which consists of the President and a single chamber elected by majority vote. The role of the President is largely ceremonial although he does have power to veto some decisions and exercises powers over civil service appointments and internal security matters.

Singapore is a major regional financial centre but is not generally regarded as a "tax haven". It is nevertheless an attractive territory in which to establish a company for international trade or international investment. There are tax incentives available, foreign source dividends; foreign branch profits and foreign source service income are exempt from tax. Singapore also has extensive tax treaties and unilateral relief and foreign dividends can often be redistributed to foreign shareholders tax-free. By these means the effective rate of tax in Singapore can be significantly reduced.

The United States is not usually thought of as a tax haven. The LLC or Limited Liability Company is however a legal structure which, in the right circumstances is not liable to taxation. The LLC is not a corporation and whilst it is not a partnership, probably the easiest way of describing it is as a partnership which is a legal person and which has limited liability. The LLC is not itself taxed and its income is taxed in the hands of the members or owners.

A United States Limited Liability Company which has non-resident members and which conducts no business and has no source of income in the United States is not subject to federal income tax and generally not subject to state income tax. The states in which LLC's are usually formed are Delaware, Wyoming, Oregon, New Jersey, New York, Florida, Washington and Arkansas. These states require only a minimum annual report and a flat annual license fee.